MOJGANCHAPARIHA|APRIL2021 A SCENARIO-BASED ANALYSIS OF THE IMPLEMENTATION OF SUSTAINABLE DEVELOPMENT GOALS BY 2050 A CASE STUDY OF IRAN CUSPWORKINGPAPER|NO27|CUSP.AC.UK CUSP An ESRC Research Centre Working Paper Series ISSN: 2397-8341 The Centre for the Understanding of Sustainable Prosperity is funded by the UK‘s Economic and Social Research Council (ESRC). The overall research question is: What can prosperity possibly mean in a world of environmental, social and economic limits?—We work with people, policy and business to address this question, developing pragmatic steps towards a shared and lasting prosperity. For more information, please visit: cusp.ac.uk. Publication Chapariha M 2021. A scenario-based analysis of the implementation of Sustainable Development Goals (SDGs) by 2050: A case study of Iran. CUSP Working Paper No 27. Guildford: Centre for the Understanding of Sustainable Prosperity. Online at: www.cusp.ac.uk/publications. 1.1.AcknowledgementsPublication NamesThis working2020. paperTitle. is basedCUSP on Working my PhD thesisPaper that No. will Guildford: be submitted Centre to the for Lisbonthe SchoolUnderstanding of Economics of Sustainableand Management Prosperity. at the University Online at:of Lisbon.www.cusp.ac.uk/publications I would like to thank my. supervisor, professor Peter Victor, for his advice, encouragement, support, and detailed comments on this paper. The financial support of the Economic and Social Research Council for the Centre for the Understanding of Sustainable Prosperity (ESRC grant no: ES/M010163/1) is gratefully acknowledged. Contact details Mojgan Chapariha, CUSP, Lisbon School of Economics and Management, University of Lisbon; Email: [email protected] © CUSP 2021 The views expressed in this document are those of the authors. This publication and its contents may be reproduced for non-commercial purposes as long as the reference source is cited. Cover image: courtesy of Sajjad Ahmadi/unsplash.com 2 | CUSP WORKING PAPER No 27 www.cusp.ac.uk Summary This paper presents a systems dynamics model for exploring possibilities for achieving four SDGs (SDG-1, SDG-8, SDG-12, and SDG-13) in Iran. The model is used to generate four possible stories about the implementation of measures to achieve these SDGs in the future of the Iranian economy from 2020 to 2050: 1) the Scenario of Business as Usual continues current trends and projects them into the future, 2) the Scenario of Inclusive Growth is designed to simulate more income equality and faster economic growth, 3) the Scenario of a Steady State introduces measures to improve social, and environmental aspects while having zero economic growth, and 4) the Scenario of Well-being for People and Planet is designed to improve socio-economic and environmental aspects of the Iranian economy to achieve the four SDGs in Iran. The performance of the Iranian economy for progressing towards the SDGs is monitored through four SDG indexes which are measured based on the arithmetic mean of selected indicators for each SDG, and a Combined Index of SDGs which is measured based on the arithmetic mean of the four SDGs indexes. The results of the simulations of the SDGs model of Iran shows that the transformational scenarios (Steady State, and Well-being for People and Planet) provide better pathways in comparison to conventional scenarios (Business as Usual and Inclusive Growth) for achieving the SDGs. Moreover, transformational policy changes and extraordinary efforts are required for progress in achieving SDGs overall. 3 | CUSP WORKING PAPER No 27 www.cusp.ac.uk 1. Introduction The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015 to combat environmental issues within the broader context of economic and social development in the period 2015 to 2030. Discussions on SDGs illustrate that they are important development agenda for achieving sustainability, human and ecological well-being. Costanza et al. (2016) argue that “The SDGs represent a major potential tipping point in the future of humanity” (Costanza, Fioramonti, and Kubiszewski 2016). It is necessary to have global goals such as SDGs; however, implementing and achieving SDGs is another important factor. The implementation of SDGs can be challenging in different aspects, especially in developing countries. This is because the implementation of SDGs needs infrastructure, financial resources, availability of data, etc. Monitoring the progress in achieving SDGs is important for analysing best possible pathways for achieving them. In this regard, Randers et al. (2018) constructed an integrated “Global Systems Model”, Earth3, which links socio- economic and biophysical systems and then simulates the implementation of 17 SDGs within 9 planetary boundaries (Randers et al. 2018). Earth3 produces four scenarios of Business as Usual, Accelerating Economic Growth, Stronger Efforts on All Fronts, and Transformational Change which measures the number of SDGs achieved for seven World regions in the period of 2018 to 2050 (ibid). They concluded that for achieving SDGs within Planetary Boundaries, implementing transformational and extraordinary policy changes are required (ibid). Similarly, this research considers two categorizes of scenarios: conventional and transformational. The focus of this paper is on implications of achieving four SDGs in Iran: SDG- 1 (eradicating poverty), SDG-8 (economic growth and decent work), SDG-12 (sustainable production and consumption), and SDG-13 (climate action). Therefore, a systems dynamics model is constructed to examine the possible achievement of four SDGs in the period 2020 to 2050 under four scenarios. These four scenarios are categorized into two groups of conventional scenarios (Business as Usual, and Inclusive Growth) that are based on ordinary efforts and conventional policies and transformational scenarios (Steady State, and Well-being for People and Planet) which are based on extraordinary efforts and radical policy changes. Scenario of “Business as Usual” is a projection of recent trends into the future. Scenario of “Inclusive Growth” considers socio-economic factors such as 4 | CUSP WORKING PAPER No 27 www.cusp.ac.uk higher economic growth, income redistribution, and a higher level of population growth as its main objectives. Scenario of “Steady State Economy” is based on zero economic growth, income redistribution, a lower level of population growth, and a reduction in working hours, and is supported by environmental plans including a carbon tax and the redirection of income from the fossil-fuel industry to renewable energy investment. Scenario of “Well- being for People and Planet” is based on income redistribution, a medium level of population growth, and a reduction in working hours, but does not control the GDP growth rate. It also considers a progressive carbon tax and the redirection of income from the fossil-fuel industry to renewable energy investment. Finally, the paper will compare the scenarios in terms of the extent to which they lead toward a sustainable economy that improves human and ecological well-being in Iran by 2050. This paper has eight main sections (including the introduction and conclusions). In section 2, it explains the case study of Iran. Then in section 3, it explains the structure of the Iran’s Ecological Macroeconomics Model of SDGs. Then in section 4, it describes four scenarios of the SDGs model categorized into conventional and transformational scenarios. Then in section 5, it describes the policy changes of the scenarios. Next, in section 6, it compares the results of simulations of the systems dynamics model of SDGs in Iran under the four scenarios. It will analyse progress toward achieving four goals of SDGs in Iran through measuring growth of SDGs index. Also, it illustrates the result of the combined index of SDGs in different scenarios. In section 7, it does a sensitivity analysis to assess the influence of parameters, variables, and policies on the output of the model. 2. Case Study of Iran The Islamic Republic of Iran (Iran for short) is in the continent of Asia and the region of the Middle East. Iran, with an area of 1,628,760 square kilometres, ranks as the sixteenth biggest country in the world (World Bank 2020f). Iran shares borders with several countries, including Turkey, Azerbaijan, Armenia, Iraq, Pakistan, Afghanistan, and Turkmenistan. Also, Iran borders the Caspian Sea in the north and the Persian Gulf and the Gulf of Oman in the south. Figure 1 depicts a map of modern Iran. Iran has a population of around 81.8 million (World Bank 2020g), which forms around 1% of the world’s population. Iran’s population increased from 21 million in 1960 to 82 million in 2018 (World Bank 2020g). 5 | CUSP WORKING PAPER No 27 www.cusp.ac.uk Figure 1: Modern Iran (Source: United Nations) Iran is dealing with socio-economic issues such as poverty, income inequality, high inflation, a high unemployment rate, and lack of decent work which these macroeconomic indicators are addressed in the SDGs model of Iran through simulating SDG-1 and SDG-8. Moreover, Iran is dealing with some environmental issues such as high levels of CO2 emissions and ecological deficit which these environmental issues have been addressed in the SDGs model of Iran through simulating SDG-12 and SDG-13. The IMF provides the inflation rate based on average consumer prices, which illustrate fluctuations between 4% and 50% in the period 1980 to 2020 (International Monetary Fund 2019). Income inequality1 has been fluctuating over years, however; in comparison to a level of 46 in 1979, it has declined to 40 in 2017 (Central Bank of the Islamic Republic of Iran 2020). Poverty data reporting based on World Bank and Iranian sources are different. The World Bank reported that 11.6% of the population in 2016 were living below the 1 Gini coefficient is measured based on disposable income (income after deducting tax). 6 | CUSP WORKING PAPER No 27 www.cusp.ac.uk poverty line (World Bank 2020h). However, an Iranian economist declared that in 2015, 40% of people were doing so (BBC 2015).